The money market remained on the firm side for most
tenors throughout the last week. However, volatility was seen in the
overnight trades as deals were settled around 5.50% for most part of the
week, but tumbled to below 1% when the State Bank of Pakistan intervened
through an OMO mopping up Rs.5bn in one-week with little or no effect as
rates continued to stay at their low levels.

One and two-week tenors were also actively traded in
a band of 4.00% and 1.5% and 4.75 and 2.75%, respectively. One-month
received bids and offers in a band of 4.25% and 4.75% with some trades
settling at around 4.40%. Longer tenors remained calm with bids for
three and six-month quoted at 4.75 and 5.40% against offers at 5.25% and
5.80%.

Demand for three and six-months T-bill continued in
the market with bids at 4.80% and 5.60% against offers at 4.60% and
5.50%.

Bond market remained calm as banks were hesitant to
take long positions in securities as bids and offers were quoted in a
band of 8.35% and 8.25%, respectively.

FUTURE OUTLOOK

Due to the heavy inflow of around Rs99 billion in the
upcoming week rates are likely to remain at the prevailing levels.
T-bill three and twelve month is also due in the coming week as market
is expecting a lesser T-bill target compare to the maturing amount.